The stock market correction continues with underlying strength

In the current stock-market correction, the Dow has performed the worst and the technology-leaden Nasdaq has been the strongest. The S&P has dropped down to the mid point of its former gain – from June 24 to August 2. As long as the S&P stays above this point it is bullish and likely to move higher. The Dow dropped on Wednesday but rose on Thursday and Friday for a three-day bullish turnaround. The Nasdaq dropped for only two days (August 14 and 15). The Nasdaq’s gains on Thursday and Friday have it approaching its previous high of August 14.

Our Relative-Strength Stock Market Sector Table shows a bullish picture. Both the Cyclicals and Technology groups where tied at 1.7% gain in market strength. The defensive Consumer Staples group lost 0.2% and the Finance group lost 0.4%. But weakness was seen only in the real estate sector (losing 3.3%). Technology hardware rocketed up by an amazing 9.4% with additional good gains in Electronics, Autos and Machines. Retail dropped but Aerospace increased. Capital goods in general are doing very well.

Here’s the relative strength chart of the Technology Sector:technology

Here’s the relative strength graph of the Real Estate Sector:real_estate

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